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Old Pension Scheme Under 8th Pay Commission? What Central Govt Employees Should Know

Sweta Mitra
By Sweta Mitra
3 min read
Published: 06 Mar 2026
Old Pension Yojana

8th Pay Commission: The debate over pension reform for central government employees has once again intensified. With the 8th Pay Commission process underway, employee unions have renewed their demand for the full restoration of the Old Pension Scheme (OPS). Employee unions argue that the new system lacks pension certainty, and the government should revert to the old system.

What is the detail?

Employee organizations, including the Confederation of Central Government Employees and Workers and the All India Defence Employees Federation (AIDEF), have submitted their demands to the staff-side drafting committee of the National Council-Joint Consultative Mechanism (NC-JCM). The unions have clearly stated that both the National Pension System (NPS) and the recently introduced Unified Pension System (UPS) should be abolished and the OPS should be reinstated.

In fact, employee response to UPS has been far lower than expected. The government informed Parliament that as of November 30, 2025, only 122,123 central government employees had opted for UPS. This includes newly recruited employees, existing employees, and some retired employees. The total number of eligible employees is estimated to be around 2.3 million to 2.5 million. This means that only 4–5% of the total workforce has adopted UPS.

What did the union leaders say?

Union leaders say this low number indicates that employees lack confidence in the new pension system. They argue that under the OPS, employees received a pension of approximately 50% of their last salary upon retirement, plus dearness allowance (DA). However, under the NPS, pensions depend on market returns, making future income uncertain.

However, the government’s stance has been clear so far. The government states that there is currently no proposal to reintroduce the OPS. According to the government, the NPS is necessary to offset the long-term burden of pensions on the public treasury. Therefore, instead of completely eliminating the NPS, the government has found a middle ground and offered the UPS option, which offers some assurance of a minimum pension.

Now that discussions regarding the 8th Pay Commission have begun, it is believed that the pension issue could become the most controversial topic. Employee organizations are preparing to raise this issue vigorously, while the government is citing fiscal concerns. Therefore, it will be important to see in the coming months what major changes the Pay Commission’s recommendations will reveal regarding the pension system.

What is the fitment factor?

First, understand what the fitment factor is. It’s a multiplier used to determine the new basic salary. Until the new pay commission is implemented, employees receive dearness allowance (DA), which increases every six months. Sometimes, by the time the new commission is implemented, the DA reaches 100% or more. In such cases, the accumulated DA is first added to the existing basic pay, followed by the fitment factor. This means that the actual increase is determined only after adjusting the amount already received.

The clearest example of this was seen during the 7th Pay Commission. At that time, the fitment factor was set at 2.57, and DA was approximately 125%. Suppose an employee’s basic salary was Rs 7,000. Adding 125% DA resulted in a total salary of Rs 15,750. When the new basic salary was fixed at 2.57, it became Rs 18,000. This means the actual increase was only Rs 2,250, which is approximately 14.3%. This means that the increase that appeared to be 157% actually turned out to be only about 14%.

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